Monthly Archives: March 2020

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Coronavirus (Covid-19)..A Reckoning

It’s been a long time coming. The pandemic occurring worldwide, and the imminent health care tsunami about to overwhelm the United States, is exposing all of the weaknesses of not just the health care system, but the economy as well. As our government flails to address the immediate crisis, the long term consequences of all of our shortcomings in society will be laid bare for all to see and understand.

Not to get too biblical here, but the reckoning that we are about to experience is not the “end of days.” It is not an apocalypse. However,, what it is, is the natural cycle of stopping over-indulgence and hedonism, and returning to the basics of human existence. In essence, a reckoning.

The way I see it, the Coronavirus pandemic will resolve in many phases. We are all in phase one right now, some disbelief, some panic, and some resignation to the life changes we will all be dealing with in the weeks, months, and possibly years to come. Estimates of over a million confirmed cases with a 1-2 % mortality rate worldwide are now coming to pass. Currently, New York City is the epicenter of the Coronavirus epidemic. But not for long. As of 3/28/2020, there is all kind of wild speculation about how to “flatten the curve.” But like most health crisis, the coronavirus must run its course. The very nature of how we live our lives has changed overnight, and will remain for a very long time. Congress has approved a $2 Trillion rescue package that will pay most Americans $1200, pay billions to bail out distressed corporations and small businesses, fund some hospital expansion and improvements, and give paid family leave and tax credits to individuals. But believe it or not $2 Trillion (or $6 Trillion counting a Federal Reserve pump of cash into the banking system), might just too little, too late!

Not since the Marshall Plan in the late 1940’s the plan championed by General George Marshall to rebuild war torn Western Europe in the face of the mounting Soviet threat. has such a fundamental investment plan become not just necessary, but vital to providing a path of survival in the rest of the 21st century. As the nation and the world transformed after both the Great Depression and the Second World War, a 21st century transformation of similar need must occur. One can only hope.

Later on, when the health crisis has abated, the financial crisis will emerge. This will be the second shase. As time wears on, as unemployment grows, and delinquencies on debt explode, a financial crisis at the level of the 2008 crisis will emerge. This is when the real bailout will begin. Again and again over the last few weeks, “experts” have opined that the economy will come roaring back once the health crisis has abated. I’m not so sure. America, and for that matter the world has been and is still being indoctrinated in the concept of “social distancing.” Gonna be hard to go back to the way it was after months of conditioning to stay at least 6 feet away from strangers. Ironically, the term “six feet under” comes to mind. People will be fearful of going to concerts, sporting events, restaurants, and other social events for a long while. Remember the trepidation after 9/11.

Hopefully, as retrospection occurs, the world will look for leaders to give some level of safeguards to prepare for the NEXT global crisis ( I believe an environmental 9/11 is on the horizon). Many of the same warnings about climate change, ring familiar with the current health crisis. One can only hope that the world will learn from this experience, and resolve the differences that have separated us for so many years.

Historically, there is not a lot new here. Since the end of World War 2, we have had numerous events that seemingly came out of nowhere, but had huge warning lights that simply were ignored.

In 1949-50, as the former Soviet Union dumped millions into the North Korean military, the United States let the military slip from 13 million to 1.6 million globally, with no US troops in South Korea. On June 25, 1950, 100,000 North Koreans, supported by a large force of Soviet-made tanks almost re-unified the Korean Peninsula under the most repressive and cruel regime imaginable. It took a unified United Nations force, led by the US to force a stalemate, but not before taking the world to the brink of nuclear conflict with China.

In 1962, the world again stared down the throat of nuclear destruction when Cuba. again with nuclear weapons supplied by the Soviet Union, forced the world to the brink of the unthinkable, even though warnings of a Soviet incursion into the western hemisphere was imminent.

In the mid 1990’s the US Commission on National Security, better know as the Hart-Rudman Report, concluded that an attack by terrorists on the American homeland was imminent, yet the nation was consumed with the Clinton-Monica Lewinsky scandal. And 500 votes in Florida in the 2000 Presidential election. Then along came 9/11/2001, and the world was shocked.

https://en.wikipedia.org/wiki/U.S._Commission_on_National_Security/21st_Century

Fast forward to 2007, many economists predicted an economic collapse that would occur within a short time. And we all know what happened next. The term “derivatives”, or banks betting against themselves in the mortgage market, led to the Countrywide Mortgage collapse, that led to the Morgan Stanley collapse and Americans felt the consequences. The US and the world stared into the abyss of global depression, even though there was significant evidence such an event would occur.

But this event is unique. The enemy cannot be seen, has no mercy, political leanings, no preference toward race, gender, sexual preference, ethnicity, or social status. Fear and panic are as dangerous as the virus itself, IF we all let it overcome all of us.

Yes, this health crisis will pass, with due diligence and focus by our leaders, and by the American people. However, the long term effects of the coronavirus crisis will force all of us to change how we work, spend, consume, and save. For years now. we have heard the statistic that most working Americans have less than $400 in savings, would be in dire financial straits if the missed more than two paychecks, Because of this crisis, many of us will at the minimum see less working hours, temporary furloughs, or in many cases the permanent layoffs that will occur.

As I have heard over the last few weeks, I believe falsely, the fundamentals of the American economy are on solid ground. Back in 2007, at the beginning of the financial crisis, the fundamentals of the American economy were considered solid. Yet, because of irresponsible behavior by the financial sector, as well as over speculation in the stock market, and an overheated housing market, the perfect storm arrived.

Imagine now, six months where 10 million or so people lose their jobs, or at a minimum have reduced wages, and can’t pay the mortgage or the utility bills or the credit card bills? How long until the financial sector will begin to contract. In 2009, President Obama pushed through a financial stimulus package that tried to bridge the gap until a recovery could occur. However, in 2020, we are now in a much different position. The crush on Social Security, Medicare, and Medicaid for my generation is approaching its zenith, most Americans have no savings, many small and medium sized cities already are facing a crisis with a dwindling and aging population, dilapidated housing and infrastructure, a widening gap between the educated and the under educated. And now, a unprecedented crisis sits on the doorstep.

The weakness in the health care field will be exposed. The system is about to be overwhelmed. A little history now, in 1946 the Hill-Burton Act was passed in Congress. This bill was designed to modernize the hospital system in the United States. In the post war era, a perfect health care storm was brewing. Returning veterans who were injured in World War 2 would require continuous care, and as well, returning veterans would return to wives to begin families. Most hospitals were woefully unprepared, and the goal of Hill-Burton was to provide 4.5 hospital beds per 1000 people. Essentially that ratio still exists today, in fact it is much lower for the most rural areas. See this number of beds per 1000 people. We are 32nd in the world as of 2017.

32  United States North America 2.89 2.83 2.80 2.77 −0.04 −1.42 64.0 29.3[13]

So, now you can see why so many healthcare professionals and local and state leaders are shouting from the rooftops about the impending health crisis. We have seen in recent years hospitals in rural areas either closing outright or consolidating due to high healthcare costs. This apathy towards maintaining a quality healthcare system in light of an aging population, growing medical conditions due to poor diet and lifestyle, and now a pandemic has brought the chickens home to roost.

What we need is a new Hill-Burton Act to modernize America’s hospital system, as well as a serious attempt at either Medicare for all or at least a public health care insurance option for the American people. The corona virus crisis is shining a beacon, a strobe light on the urgent need for this kind of reform.

Next, Americans need to begin to re-evaluate its value system. Since the 1980’s US citizens have morphed from a saving economy to a spending economy. It is common knowledge that well over 50 percent of the nation has less than $400 in savings. That most Americans live paycheck to paycheck. That most cannot survive without a paycheck. Yet, here we are, not learning again from the 2008 financial crisis when housing losses and bankruptcies reached epidemic proportions.

For people of my generation and older, a little trip down memory lane. When I was young, I can’t remember the number of times our family visited family and friends, and as the kids set off to play and explore, we would go into the basement and see shelves full of canned foods, mason jars of fruit preserves, and jugs of water. Our parents and grandparents were products of the Great Depression and the Nuclear threat. The Great Depression made grandparents and parents stock food and water because of the experience of not having money or food or a job.

Scary as it sounds, most Americans today do not even have $400 saved in case of an emergency. The American economy has become a spending economy, not a saving economy. And, in a lot of ways, priorities of the bottom 50% of the population is questionable at best. Spending a couple of hundred dollars on the latest phone, financing auto and home goods with loans way higher than they can afford, and a lack of setting aside money for emergencies are as much a threat to upward mobility for the 50% as lack of opportunity as well.

If it sounds harsh to criticize spending habits, there is in fact more blame to be placed on the predatory practices of the purveyors of the excessive materialism that has permeated our society. Corporations market products to those who can’t afford them, banks give loans to those who will struggle to pay them back, and an entire industry exists to market the products in the medial, both broadcast and online. Efforts were made to reform the financial sector after the 2008 financial crisis, and much of that has been dismantled over the last three years at the behest of corporate America and Wall Street. History is about to repeat itself.

As crazy as it sounds, the myopic nature of all of those who pull the strings is stunning. Any first year business student at a community college (of which I am one) learns in Economics 101 the curve of the American economy. What goes up, must come down.

Graph of the business cycle, shown as an upward wavy line superimposed on a straight upward line (which shows the growth trend). The x-axis represents time; the y-axis represents output (GDP). Where the wavy line dips down is the trough; where it rises above the growth trend line is the peak. In between the trough and peak is expansion; in between the peak and trough is contraction.

As the last 9 years have been a long period of sustained economic growth, the red line on the chart has now arrived, accelerated by the health crisis we now face. The good employment numbers by the way are a lagging indicator of an economic recovery. In fact, employment may stay positive even though a downturn can begin at the same time. In short, most economists predicted an economic downturn in 2020 well before the onset of the Coronavirus pandemic. And usually the downturn starts when one sector of the economy slides or in the most serious cases collapses. This crisis has numerous sectors collapsing all at once. And will ultimately spread to the financial sector. The damage will take years to rectify, and will essentially change the way we all live and work.

Conclusions and Recommendations: 

Obviously, the first reforms have to be in the health care system. Experts with more knowledge and expertise than me need to convene a health care summit, a global organization much like the IPCC (International Panel on Climate Change) and present a protocol to expand all phases of health care, medical research, treatments, access to basic healthcare, wellness, and in the US universal health care insurance.

Although science cannot prevent or predict all potential health threats, the CDC (Centers for Disease Control), HHS (Health and Human Services), CMS (Centers for Medicare and Medicaid Services), and FEMA (Federal Emergency Management) need to coordinate, much like the intelligence community after the 9/11 attacks. Medical intelligence and research must be well funded and listened to by our leadership.

With regards to the economy, a good start would be encouraging Americans to sign up for the US Savings bond payroll deduction program. It will ensure that savings will occur and not be subject to the whims of the stock market as 401k programs are (how much did you lose over the last month in your 401k?).

Finally, we must be prepared for the next health, environmental, or military crisis. I believe that an environmental 9/11 is on the horizon. All the warning signs are there. Inaction for 40 years will come home to roost very soon. Cutting carbon emissions is fine, renewable energy is fine, fuel efficient cars are fine. But I fear the damage is done. Not that in the next 10 years that surf will be up in Wheeling, WV, but more violent weather in the Southern United States, record fires in Australia, intentionally burning part of the Brazilian rain forest for profit, and choking pollution causing health issues in China and India, are wailing sirens trying to warn the world that calamity is possible.

Time for the world, most specifically the United States, to get their political heads out of their butts and acknowledge the science and change the world.